The industry organisation representing credit unions and building societies in New Zealand is delighted that the Credit Contracts and Financial Services Law Reform Bill passed its second reading in Parliament yesterday, and says it will bring much …Bill Will Bring Welcome Protection For Vulnerable Consumers Say Credit Unions

The industry organisation representing credit unions and building societies in New Zealand is delighted that the Credit Contracts and Financial Services Law Reform Bill passed its second reading in Parliament yesterday, and says it will bring much needed protection for vulnerable consumers.

“We’re glad to see that all political parties are supporting this Bill which will provide better protection for low-income earners from the type of predatory loan-shark behaviour so prevalent in those communities” saysNew Zealand Association of Credit Unions (NZACU) Chief Executive Henry Lynch.

“Whilst credit unions and building societies serve a diverse range of members, many of our community credit unions operate in what you would consider lower socio economic areas” said Mr Lynch. “Often people who come in seeking help have been the victim of credit contracts that have quite clearly not been affordable, with hidden penalties and interest traps”.

NZACU’s members are fully supportive of the bill, but they recognise that even with more responsible lending practices being required by law, the bigger picture issue causing a lot of debt problems is low financial literacy.

“Better understanding of basic financial concepts and simple budgeting skills is essential if we are to improve the financial wellbeing of all New Zealanders. There needs to be a combined effort by everyone in education, business and the wider community to support the government legislation with better financial literacy support” said Mr Lynch.

The NZACU and its Members are keen supporters of the National Strategy for Financial Literacy developed by the Commission for Financial Literacy and Retirement Income.

“A national, cooperative approach such as this is the only way we’ll see a long term solution to the destructive debt spiral many Kiwis find themselves in when they turn to people like loan sharks.”

Cooperatively owned credit unions and building societies in New Zealand currently have over 200,000 members, and have a long history of helping people from all walks of life achieve better financial management.